The mortgage search is anchored in the past. Home buyers take out their mortgage in the same way their parents did, in a completely analog way, going from bank to bank. The process of requesting a mortgage it is still a time of uncertainty and unease for most people who want to buy a home.
The lack of digitization in the mortgage process contrasts with the enormous size of the market. Only in Spain, between the months of January and July of this year, mortgages amounting to 35,887 million euros were contracted, according to data from the Bank of Spain. “It continues to be one of the commercial banking products that has not been digitized”, explains Juan Ferrer, CEO of
Hipoo, pioneer startup in completely online mortgage intermediation. “Currently, few processes can not be requested through the internet, from food, to renovating your wardrobe, even meeting your partner … why hasn’t digitization reached the mortgage market?” Asks Ferrer.
However, little by little the trend is changing. “The selection of mortgages is a process that has been digitizing significantly in recent years,” they conclude Borja Dávila and Andrea Sánchez, CEO and Director of Marketing and Operations respectively, of Finnovating. And they add that “banks have internalized that they have to collaborate with open innovation ecosystems to be able to adapt their products to market dynamics both nationally and internationally. There is a long way to go, but we are seeing more and more cases of collaboration between banks and companies in the fintech ecosystem, focusing on the future in a more disruptive way. In this sense, Spanish banks already detect the need to provide the mortgage sector with technological resources and most banks already offer different degrees of digitization. One of the examples is EVO, which, with hardly any branches, has released a mortgage product that you can hire entirely online, except for the visit to the notary for the signature.
“The only thing you will have to do in person is to make an appointment with the notary to sign off on your new mortgage,” sums up Juan Ferrer. “The law regulating real estate credit contracts of 2019 has increased the importance of the notary in the purchase of a new home, some procedures can be carried out digitally, but not all, so further digitization is still necessary in this phase ”, they add from Finnovating.
Also other entities such as BBVA, Santander u Openbank They allow the management and contracting of mortgage loans without having to go through branches to carry out the procedures.
“Everything can be done through the advice channel with an expert for digital clients. The physical presence of the client is only required on the day the mortgage is signed before a notary, “says Manuel Castro, founder of SimplAI and a former member of the Executive Committee of BBVA.
This paradigm shift is being driven by technology startups specialized in the mortgage sector, which even go beyond digitization, allowing users to save money in their operations, with more than 40,000 euros on average. This saving is due to the fact that they find the best mortgage offer on the market for each profile, speeding up the time invested and avoiding a multitude of problems associated with traditional contracting. The effect of the effectiveness of this service is the increase in the contracting of mortgages online. “We anticipate that within two to five years, very few people will go branch to branch with the documentation under their arms,” says the CEO of Hipoo.
These types of companies that use mortgage technology are known as mortgage tech or mortgage, and have landed in the national market after consolidating in the United States and the United Kingdom, where they mediate thousands of transactions worth millions of dollars and pounds in mortgages.
On Spain, «The trend of creation of fintech companies, proptechs, insurtech, etc. It is unstoppable and it is serving to energize many of the traditional practices of financial institutions as well as the real estate and mortgage market ”, they affirm from Finnovating, and they highlight startups such as“ IAhorro, Housfy, Finteca or Hipoo ”.
The startup The one that is taking this digitization further in Spain is Hipoo, which centralizes all mortgage offers in the same online platform based on artificial intelligence to offer a personalized service to each client. This marketplace allows its users to receive offers from different banks 100% adapted to their profile, in a process that simplifies all the paperwork, since all the documentation requested by the banks is only uploaded once, enough to see the viability of the client and send the operation to all entities. In addition, the Hipoo platform allows services related to the contracting of a mortgage, such as requesting an appraisal or receiving alternative home insurance to those offered by banks. And the whole process can be done from anywhere and with the mobile or the computer, which represents a qualitative change. Until today, “to see various personalized offers each client had to go through the same process with the different banks, present the same documents and count the same roll over and over again”, assures Ferrer.
Help from an independent expert
The application process at Hipoo begins by filling out a small form and you immediately see personalized offers tailored to your personal circumstances. Next, upload the minimum required documentation to the platform: DNI or NIE, income statement and last three payrolls. With this documentation, the offers can now be applied to the banks, so that the client has been able to compare between different options and assess the conditions that most interest him. In parallel, an expert mortgage guides the client step by step and at all times until the loan is signed.
The business model is simple: “the banks pay us a commission, which does not affect the cost of the mortgage, when our clients sign the mortgage,” says Ferrer, who adds that “this service allows Hipoo be an independent intermediary, always advocating for the interest of each client. The financial institution is interested in this collaboration because it assumes less risk and saves on customer acquisition.
Hipoo, which has been operating since 2018 and has 20,000 clients, has managed mortgages worth more than 1,500M euros. Currently, it makes use of algorithms for the preselection of mortgages, optical character recognition (OCR) methods for the validation of customer documentation, and an omnichannel-based communication system. An instant approval system will be launched shortly, as well as the implementation of machine learning, which will improve the accuracy of mortgage preselection. Finally, the next steps of the mortgage of the future will be oriented towards the digital signature and greater traceability.
Business model with travel in other countries
The use of technology at the service of the mortgage market is a reality in countries such as the United States or the United Kingdom, where digital startups stand up to traditional systems. An example of this are large startups such as Better, Movement Mortgage, Habito or Trussle, which raise financing rounds of millions of euros. In ecosystems such as the United States, where more than 30% of the population uses some type of online banking (according to Plaid’s Fintech 2021 report), mortgages have allowed people to access transparent services, with accessible prices, clear conditions and that they ensure the interest of the client, in addition to the clear advantage of hiring them from anywhere in the world and from any device connected to the internet.
It is a fact that it is time for technology startups, which currently represent 5% of a market with an opportunity cost of 200 million euros per year. With this growth perspective, Hipoo has opened a crowdfunding process with the platform Fellow Funders, with which he hopes to get € 400,000.